In the before times, when corporate and marginal income tax rates were high and stock buybacks were illegal, a business could do two things with its profit:
Reinvest it into the business, as employee compensation, equipment or facilities, and/or
Pay taxes.
In the 1980s, we gave them a third option:
Keep the money
…which for some reason was supposed to not encourage the rich to hoard money and/or engage in non-productive financialization.
The rich, of course, hoarded and engaged in financial engineering pretty much immediately, and everyone else, which meant employees, suffered for it.
Think about how stupid of an idea this is: giving the rich the ability to hoard money and then against all reason, somehow expecting that they won’t do the thing you’re incentivizing them to do. Even George Bush called it “voodoo economics”.
If you look at wages-vs-productivity curves you can see society “break” in the 1980s, with the rich running away with their wealth and everyone else getting stuck in a quagmire of low wages and starved public services.
So that’s why high progressive taxation helps employee: it forces the rich to either invest in their businesses or fund the nation.